Palomar Medical Technologies Inc. (PMTI) filed Quarterly Report for the period ended 2009-09-30.
PALOMAR MEDICAL TECHNOLOGIES INC. designs manufactures and markets lasers delivery systems and related disposable products for use in cosmetic and medical procedures. The company operates in two business segments: medical products and electronic products board components. Palomar Medical Technologies Inc. has a market cap of $172.7 million; its shares were traded at around $9.56 with and P/S ratio of 2. Palomar Medical Technologies Inc. had an annual average earning growth of 73.8% over the past 5 years.
Highlight of Business Operations:
For the three months ended September 30, 2009 and 2008, we recognized $0 and $18,000 of funded product development revenues from Procter & Gamble (and its wholly owned subsidiary The Gillette Company). For the nine months ended September 30, 2009 and 2008, we recognized $0 and $216,000, respectively, of funded product development revenues from Procter & Gamble (and its wholly owned subsidiary The Gillette Company). The decrease in funded product development revenue from Procter & Gamble is the result of the termination of the Development and License Agreement with Gillette in the first quarter of 2008.
For the three months ended September 30, 2009 and 2008, we recognized $806,000 and $937,000 of funded product development revenues from Johnson & Johnson. The funded product development revenues from Johnson & Johnson in the three and nine months ended September 30, 2009 and 2008 are provided for in several agreement amendments with Johnson & Johnson to provide for additional development funding for certain development activities and a study to test consumer perception of a home-use product which was completed in the third quarter of 2008. These payments will be recognized as revenue as costs are incurred and services are provided. As of September 30, 2009 and December 31, 2008, $199,000 and $726,000, respectively, of advance payments received from Johnson & Johnson for which services were not yet provided were included in deferred revenue. On October 16, 2009, we announced the termination of our Joint Development and License Agreement with Johnson & Johnson Consumer Companies, Inc. Despite having met all of our deliverables under the agreement, Johnson & Johnson terminated the agreement referencing the current unfavorable economic conditions as the reason for its decision. With this decision, Johnson & Johnson avoids having to make a large commercialization payment and avoids having to commit to the significant level of funding required to successfully launch a new product into the consumer market.
Other revenues. For the three months ended September 30, 2009 and 2008, we recognized $1.25 million each period of other revenues, consisting of quarterly payments relating to a License Agreement with The Procter & Gamble Company (see Note 9). For the nine months ended September 30, 2009 and 2008, we recognized $3.75 million and $4.0 million, respectively, of other revenues, consisting primarily of quarterly payments relating to a License Agreement with The Procter & Gamble Company. Other revenues for the nine months ended September 30, 2008, also include the recognition of the remaining portion of trade dress infringement fees associated with the Alma Lasers, Ltd. settlement agreement of $250,000. As of September 30, 2009 and December 31, 2008, $0 and $1.25 million, respectively, of advance payments received from Procter & Gamble for which services were not yet provided were included in deferred revenue.
Expenses relating to the Johnson & Johnson Joint Development and License Agreement (see Note 10) decreased during the three and nine months ended September 30, 2009 by $0.3 million and $1.0 million, respectively, as compared to the same periods in 2008. The decrease for the three months ended September 30, 2009 was mainly due to decreases of $122,000 for clinical expenses, $89,000 for payroll and payroll related expenses, $73,000 for general overhead expenses, and $35,000 for material costs. The decrease for the nine months ended September 30, 2009 was mainly due to decreases of $497,000 for payroll and payroll related expenses, $469,000 for material costs, offset by increases of $12,000 for clinical expenses and $10,000 for general overhead expenses.
Selling and marketing expense. For the three months ended September 30, 2009, selling and marketing expense decreased by $1.9 million over the comparable period in 2008. For the three months ended September 30, 2009, factors driving the decrease in selling and marketing expense were decreases of $1.0 million from commission expense, $562,000 from payroll and payroll related expenses, and $239,000 from general overhead expenses as compared to the same period in 2008. For the nine months ended September 30, 2009, selling and marketing expense decreased by $4.9 million over the comparable period in 2008. For the nine months ended September 30, 2009, factors driving the decrease in selling and marketing expense were decreases of $2.2 million from commission expense, $1.4 million from general overhead expenses, and $1.4 million from payroll and payroll related expenses as compared to the same period in 2008. The majority of these decreases in selling and marketing expenses directly correlate with the decreases we have experienced in our product revenues as well as our intention to reduce expenses during this difficult economic period. Expenses related to our foreign subsidiaries totaled approximately $0.4 million in each of the three months ended September 30, 2009 and 2008 and $0.9 million and $0.7 million, respectively, in the nine months ended September 30, 2009 and 2008.
General and administrative expense. For the three months ended September 30, 2009, general and administrative expenses decreased by $3.5 million over the comparable period in 2008. For the quarter ended September 30, 2009, factors driving the decrease in general and administrative expense were decreases of $3.8 million from legal expenses mainly related to patent litigation, $576,000 in general overhead expenses, and a decrease in bad debt expense of $159,000, offset by an increase of $1.1 million from incentive compensation as compared to the same period in 2008. For the nine months ended September 30, 2009, general and administrative expenses decreased by $9.7 million over the comparable period in 2008. For the quarter ended September 30, 2009, factors driving the decrease in general and administrative expense were decreases of $9.9 million from legal expenses mainly related to patent litigation, $1.5 million from payroll and payroll related expenses which consists mainly of a decrease in stock-based compensation expense, $1.1 million in general overhead expenses, and a decrease in bad debt expense of $442,000, offset by an increase of $3.0 million from incentive compensation as compared to the same period in 2008.
PMTI is in the portfolios of Charles Brandes of Brandes Investment.
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